Method and apparatus for enabling small investors with a portfolio of securities to manage taxable events within the portfolio

ABSTRACT

A method and apparatus enables an investor with a portfolio of securities to manage taxable events created by trading securities in the portfolio. A database stores information regarding securities purchased by the investor. A presentation and graphical display format directly linked to the system managing the portfolio of securities enables the investor easily to make a selection as to the shares to be sold for the desired cash and tax results. A graphical display interface provides the investor with a graph having at least two axes showing cash to be received on one axis, and the tax result on another axis, with the investor permitted to click on points that are available. In generating the graph, each point available for selection represents an intersection of a cash and tax result based on the investor&#39;s purchases and the current expected sales price for the securities. Once the investor selects his preferred outcome, the system notes those securities (by specific lot, price, date and other identifying means) that correspond to that outcome for sale. The graphical user interface and connection and linkage to a system for managing a portfolio of securities or some other record keeping, order handling and execution system resolves the problem of making complex and difficult determinations to achieve a cash/tax goal with a simple and single click of a mouse.

RELATED APPLICATIONS

The present invention is related to U.S. patent application Ser. No.09/038,158 entitled "Method and Apparatus for Enabling Smaller Investorsor Others to Create and Manage a Portfolio of Securities or Other Assetsor Liabilities on a Cost Effective Basis" filed on Mar. 11, 1998 andSer. No. 09/139,020 entitled "Method and Apparatus for Enabling SmallerInvestors or Others to Create and Manage a Portfolio of Securities orOther Assets or Liabilities on a Cost Effective Basis" filed on Aug. 24,1998, which were both filed by the same inventor. U.S. patentapplication Ser. Nos. 09/038,158 and 09/139,020 are hereby incorporatedby reference in their entirety, as if repeated herein, including thedrawings.

BACKGROUND OF THE INVENTION

The present invention relates generally to methods and apparatuses formanaging portfolios of securities for small investors, and moreparticularly to a method and apparatus for managing a portfolio ofsecurities for a small investor, in which the small investor is able tomeasure, test and manage taxable events caused by buying, holding andselling securities within the portfolio.

Currently, investors seeking to transact in securities to obtain aspecific tax result such as a certain amount of capital gain or lossmust keep track of the specific tax lots of the security they own andthen designate the appropriate lots to obtain the desired result, withthe broker then required to confirm back to the investor that thespecific designated securities have been sold. Often, the paper work,record-keeping and tax analysis required is beyond the means of mostsmaller investors. The broker or whoever holds the securities must alsokeep track of the securities as specifically denominated securities soas to be able to track the tax effects and be certain that the correctsecurities are being sold. If the securities cannot be tracked, then thefirst-in, first-out method is supposed to be used for calculatingtaxable gain or loss; for mutual funds, an average basis in the mutualfund shares held by the investor may be and usually is used for suchcalculation.

An investor buying securities may have both a gain and a loss, or only again or only a loss, or no gain or loss, in any particular security. Asan example, an investor who purchased 11 lots of 100 shares of Motorolastock over the course of ten weeks at prices of $40, $42, $44 $46, $48,$50, $52, $54, $56, $58 and $60 would have an overall gain on the entire1100 shares of Motorola if the current price was above $50, an overallloss if the current price was below $50 and no gain or loss if the pricewas at $50. However, looking at each lot separately, if the currentprice was $50, the investor would have a gain--if he sold--any of thelots bought for less than $50, a loss--if he sold--any of the lotsbought for more than $50 and no gain or loss if he sold the one lotpurchased at $50 or the lot bought at $48 along with the lot bought at$52, etc. Similarly, if the current price was $56, the portfolio as awhole would show a gain, but the investor could achieve a loss if hesold at that price only those lots acquired with a tax basis above $56(i.e., the lots acquired for $58 and $60), and none others or only thosethat did not eliminate the gain (such as the lot at $56 and the lot at$54 along with the lots at $58 and $60). Obviously, depending on what issold, the tax results change, as does the amount of cash generated bythe transaction. It is very important to investors to be able to controlboth the cash to be received and the taxes to be paid within the limitsof the economic gain and loss they have achieved. If an investor canobtain $100 cash without a taxable gain, then that is worth more (by theamount of the tax bracket times the cash received multiplied by the timevalue of the money for so long as the tax remains unpaid) than obtaining$100 cash where current taxes need to be paid on that cash.

It is very difficult for an investor to keep track of all these separatelots and results if he has multiple securities bought at a variety oftimes at different prices, especially when the selling prices of thesecurities changes frequently, thereby changing the results frequently.Moreover, it is difficult to recognize the relationship between theamount of cash that can be received from the sale and the tax effects,and it is difficult in the case of multiple securities and multiple lotsto communicate the information to a broker easily to ensure that thecorrect securities are sold at the specified prices to effect thedesired result.

In a system like the one that is described in U.S. patent applicationSer. No. 09/139,020 an investor is permitted easily to engage instrategies such as "dollar averaging" where a small, but constant,amount--such as $100 or $1,000--is invested periodically (e.g., eachweek or month) in a multitude of securities at whatever the prevailingprice may be. In that event, it would be almost impossible for aninvestor currently to maintain the appropriate tax records and to have asystem that would allow the investor to understand the tax and linkedcash implications of possible transactions and then obtain the desiredtax and cash results, especially where the capital assets beingtransacted are bought and sold at prices that change frequently (such assecurities). In addition, it is very difficult for an investor tounderstand the remaining available tax-cash positions that result aftera change in a complex portfolio due to the sale of selected securitiesfrom, or purchase for, the portfolio. In addition, it is very difficultfor an investor to understand and manage the tax-cash implications thatresult from combining potentially short and long term capital asset taximplications with gains and losses and then to be able to obtain thedesired tax results by executing transactions that provide the desiredresults. It is also very difficult for an investor to understand theinteractivity of the tax implications from transactions in selectedassets with the overall tax results that the investor incurs taking intoaccount other taxes, such as income or other transactions in otherassets or liabilities. It is also very difficult for an investor tounderstand the effects that time will have in converting short-termgains into long-term gains in a plurality of securities or trade lotsbought at different times. Finally, it is difficult to determine thesetax-cash implications, and their related portfolio implications, in thecontext of a managed portfolio of assets.

The present invention is therefore directed to the problem of developinga method and apparatus for enabling a small investor with a portfolio ofsecurities to understand and manage the related taxable events and cashimplications created by buying and selling securities (which couldinclude mutual funds) in a complex portfolio.

SUMMARY OF THE INVENTION

The present invention solves this problem by providing a presentationand graphical display format directly linked to a system for managingthe portfolio of securities enabling the investor easily to make aselection and place an order as to the shares to be sold for the desiredcash and tax results.

According to the present invention, a graphical display interfaceprovides the investor with a graph showing, in the event of a sale ofselected securities, the cash to be received on, for example, thehorizontal axis, and the tax result on, say the vertical axis. Theinvestor is further permitted to click on the discrete points that areavailable and obtain information as to the specific securitiesunderlying the point. The investor is further permitted to enter ordersto effect transactions in those securities.

The points that are available depend on the granularity of the purchasesthat have been made by the investor--such as how many purchases therewere and at how many different prices, and how close together the pricesare, etc. The graph is generated by accessing the database, which couldbe based on records held by a custodian (such as a bank, a broker orsome other intermediary), or on the investor's own records, if theinvestor is keeping track of the information itself. In generating thegraph, each point available for selection represents an intersection ofa cash and tax result based on the investor's purchases and the currentexpected sales price for the securities. Once the investor selects hispreferred outcome, the system notes those securities that correspond tothat outcome for sale. The noted securities are then sold in accordancewith the seller's instructions and pursuant to whatever system theseller is using for securities dispositions (if not the inventiondisclosed in the above mentioned patent applications), with the requiredconfirmations generated by the selling system.

This graphical user interface and connection and linkage to the presentinvention system or some other record keeping, order handling andexecution system resolves the problem of making complex and difficultdeterminations to achieve a cash-tax goal with a simple and single clickof a mouse.

The present invention provides a method for enabling a user to determinethe tax consequences from selling multiple assets/liabilities. Themethod includes the steps of: a) determining the potential taxconsequences that would result from trading various combinations of theplurality of assets/liabilities, in which each of the potential taxconsequences represents the potential tax consequence that would resultfrom trading one particular subset of assets/liabilities; b) determiningthe potential proceeds for each of the potential tax consequences thatwould result from trading the various combinations of theassets/liabilities; and c) displaying the potential proceeds and thepotential tax consequences in a graphical format.

In an advantageous implementation of the method of the presentinvention, the method further includes the step of automatically tradingone of the subsets of assets/liabilities based upon a desired taxconsequence selected by the user.

According to yet another advantageous implementation of the method ofthe present invention, the method further includes the step ofdisplaying the series of sums in a graphical format, in which one axisrepresents the potential proceeds and the other axis represents thepotential tax consequences from selling the assets/liabilities, in whicheach potential trade of a particular subset of the assets/liabilities isplotted as a point in the graph, and each point has an attribute relatedto both a potential proceeds and a potential tax consequence resultingfrom a trade of the associated particular subset of assets/liabilities.

According to yet another aspect of the present invention, the methodfurther includes the step of maintaining an association of eachasset/liability to each of the points plotted in the graph displayed tothe user.

In another advantageous implementation of the above method of thepresent invention, the method further includes the step of displayingthe series as above, but displaying it with respect to each securityowned by the user as a separate security noted on a graph on a threedimensional array, where one axis represents the capital gain or lossand the other axis represents proceeds from selling the securities andthe third axis shows that representation for each particular issue ofsecurity.

Yet another particularly advantageous implementation of the above methodof the present invention includes the step of enabling the user toselect one of the points in the graph being displayed and thenidentifying to the user which of the securities must be sold to obtain adesired tax treatment.

Further, the method of the present invention also includes the step ofhighlighting significant points and lines in the graph. In thisembodiment of the method of the present invention, the significantpoints include a maximum potential gain, a maximum potential loss, and apoint where the proceeds are maximum while remaining tax neutral, and apoint where the proceeds are maximum. The significant lines includewhere potential proceeds are realized with a zero tax consequence, wherepotential proceeds can be received with a specified amount of potentialtax consequence, and where potential tax consequences can be achievedwith a specified amount of potential proceeds.

According to yet another aspect of the present invention, the methodfurther includes the steps of maintaining a basis and date ofacquisition for each of the assets/liabilities in the portfolio,obtaining a trading price for each of the assets/liabilities in theportfolio, and displaying the potential proceeds and the potential taxconsequences on a graph. In the graph, one axis represents the potentialproceeds and another axis represents the potential tax consequence thatwould result from trading particular subsets of assets/liabilities, inwhich each potential trade of a particular subset of theassets/liabilities is plotted as a point in the graph, and each pointhas an attribute related to both a potential proceeds and a potentialtax consequence resulting from a trade of the associated particularsubset of assets/liabilities. The method further includes the steps ofmaintaining an association of each security to each of the pointsplotted in the graph, enabling the user to select one of the points inthe graph thereby indicating the user's desired tax consequence anddesired proceeds, identifying to the user which of theassets/liabilities must be traded to obtain the user's desired taxconsequences and desired proceeds, and then executing a trade of theassets/liabilities identified upon confirmation by the user.

Another implementation of the method of the present invention includesthe steps of enabling the user to indicate a desired proceeds andoutputting a list of assets/liabilities to sell to obtain the desiredproceeds while incurring a potential tax consequence.

According to yet another implementation of the present invention, themethod further includes the steps of: d) determining for each security(on a share, or fractional share basis, if necessary) whether thesecurity has been held for a sufficient time to qualify for long-termcapital gain treatment (determined by comparing the date of acquisitionof such security with the date of expected sale of such security andcalculating whether the difference is sufficient to so qualify) and e)showing as (I) two separate graphs the tax-cash positions for short-termand long-term capital tax treatment or (ii) one composite graph of twosuch graphs superimposed on each other or (iii) one graph the combinedeffect utilizing then applicable tax rules showing the results of acombination of various sales involving both short and long-term capitalasset qualified securities or (iv) a three dimensional graph showinglong-term capital gain or loss or one axis, short-term capital gain orloss on another axis and proceeds to be realized on a third.

According to yet another implementation of the present invention, themethod further includes enabling the user to time shift the portfolio byspecifying a date and having the capital gain or loss reflected in theportfolio and current prices transformed to long-term gain fromshort-term gain as time is deemed to be passing regarding theportfolio's holdings. This would be accomplished by having the databasenote the date of acquisition of the underlying security trade. Thedatabase would also determine the date, according to then current taxrules as provided in the program running the current invention (whichsuch program could be updated by accessing a web site that updates theprogram embodying the current invention), or with such dates as inputtedfrom the user or as downloaded or accessed from a source such as a website that updates the program embodying the current invention or thatmaintains the database, as to when the asset would be held sufficientlylong enough to qualify for long-term capital gains treatment. In thismanner, the tax consequences display presented to the user can be timeshifted to indicate the consequences that would occur if sales were madeat times subsequent to the current date at which the program is running.

According to yet another implementation of the present invention, themethod further includes a time-based tax-price differential calculator.This calculator would determine the tax savings resulting from thepassage of time in the conversion of short-term gains to long-term gainsin the event of a sale of a security and determine the reduction inprice from current price levels that would be needed to offset the taxsavings. In this manner, a user can quickly determine the potential gainfrom waiting to engage in a transaction that would produce a long-termcapital gain instead of a short-term capital gain and the per sharereduction in price that would have to occur from current price levels toeliminate the after-tax benefit resulting from such transformation. Byway of example, a user may own a share of a security currently tradingat $300 with a basis of $50. If that share when sold would generate ashort-term taxable gain, with an assumed tax rate of 40%, then the taxwould be $100 when the share was sold (($300 (the current sale price)minus $50 (the basis)) times 40% equals $100), with $200 of after taxproceeds being realized ($300 minus the tax of $100). By contrast, ifthe share when sold would generate a long-term taxable gain taxed at,say, only a 20% rate, then the tax would be only $50 when the share wassold (($300-$50) times 20%=$50), with $250 of after tax proceeds beingrealized ($300-$50). Consequently, the share would have to fall in priceto $237.50 ($237.50-($237.50 -$50)*20%=$200) from $300 to have made itworthwhile to have sold now and recognize short-term capital gainsrather than waiting, if possible, until the gain was long-term (nottaking into account the time value of money, which could also beincluded). Many investors would find it very surprising--in factextraordinarily surprising--to realize that, in this example, a shareowned by the investor would have to decrease from $300 to under $240just to compensate for the tax differential. The ability to quantify andvisualize this differential will be very valuable to investors.

According to yet another implementation of the present invention, themethod further includes the steps of exporting the information regardingsecurities sold pursuant to the steps in the preceding paragraphs to atax program, such as Intuit's TurboTax® or Kiplinger's TaxCut®, in aformat that automatically inserts such information in the appropriateplaces for inclusion in such programs for reporting to the appropriategovernmental agencies.

According to yet another implementation of the present invention, themethod further includes the steps of receiving information from a taxprogram, such as Intuit's TurboTax® or Kiplinger's TaxCut®, andcomparing it to the database information described above to identifypotential tax savings from engaging in a transaction involving any ofthe capital assets in the database.

The present invention also includes a computer based program forenabling a user to manage his/her tax consequences from tradingassets/liabilities held by the user. The program includes a tax basisregistry storing a basis for each asset/liability upon entry of theasset/liability into the program by the user. In addition, the programincludes a tax consequence calculator routine calculating a potentialtax consequence for each asset/liability in the registry selected by theuser for potential trade. Further, the program has a tax graphcalculator routine calculating a graphical representation of an overalltax consequence for each possible combination of trade sale of theselected assets/liabilities. Finally, the program includes a graphicaluser interface interacting with the user to enable the user to enterbasis, date of acquisition, and other information for eachasset/liability to be managed by the program, to enable the user toselect specific assets/liabilities for potential sale, and to enable theuser to indicate a desired tax consequence, said graphical userinterface further displaying the graphical representation of the taxconsequence calculated by the tax graph calculator routine, listingassets that must be traded to meet the tax consequences desired by theuser, and enabling the user to authorize trading of the specificassets/liabilities (which could be pursuant to a limit order, marketorder or otherwise), and providing the user confirmation of the trade ofthe specific assets/liabilities.

Another particularly advantageous implementation of the above system ofthe present invention provides for a means of calculating the expectedtax required to be paid, or expected tax benefit or credit expected tobe earned, in connection with any transaction or proposed series oftransactions. The system would include an estimate from the user or froma program such as Intuit's TurboTax® as to the marginal tax rate of theuser and then calculate the tax effect based on the capital gain or loss(short or long term) at that marginal rate.

According to yet another implementation of the above system of thepresent invention, the system would interact with a program thatcalculates the taxable effect of a transaction based on the othertaxable transactions, income and other taxable items known to the useror expected to be engaged in by the user, either as stored in a programsuch as Intuit's TurboTax® or otherwise inputted into the program by theuser.

According to yet another implementation of the above system of thepresent invention, the system would also employ an "expert agent" formanaging the tax effects and alerting the user to various strategiesthat the user may wish to employ. Specifically, the present inventionincorporates a system that monitors the user's tax position by comparingthe capital tax effects from various proposed or available transactionsand determining whether any such transactions achieve goals set by theuser, including specified levels of capital gain or loss (short and/orlong term), specified levels of proceeds, or specified levels of taxableeffects. The system then alerts the user as to the satisfaction of suchgoals by a pop-up window, by an e-mail alert, by providing a notice in afile, or through any of a number of other known means for communicatingwith a user of a computer program, that such a transaction can now beaccomplished. The user can then act, or not, on the informationprovided. The system can also be set by the user to send an order to theelectronic trading system (described below) to execute the transactionidentified by the "expert agent" with or without any user intervention.In this manner, the user can satisfy various tax-cash goalsautomatically with transactions being executed automatically. Similarly,the system can be configured so that a specified amount of securitiesare sold each month or week, with the system doing so in a manner thatattempts to reflect a specified tax goal, such as sell those securitiesthat result in $500 of proceeds and that produce the smallest taxablegain, or the largest loss, etc. while maintaining a reasonablydiversified portfolio.

The present invention also includes a system for enabling a user todetermine the tax consequences from trading multiple assets/liabilitieswithin a portfolio of assets/liabilities and to obtain a desired taxconsequence. The system of the present invention includes a processordetermining the potential tax consequences that would result fromtrading various combinations of the assets/liabilities. Each of theplurality of potential tax consequences represents the potential taxconsequence that would result from trading one particular subset ofassets/liabilities. The processor also determines the potential proceedsfor each of the potential tax consequences that would result fromtrading the various combinations of the assets/liabilities. The systemincludes a display coupled to the processor for displaying in agraphical format the tax consequences and the proceeds correspondingwith each of the tax consequences determined by the processor. Further,the system includes a user input device being coupled to the displayindicating a user desired tax consequence, and a portfolio manager beingcoupled to the user input device and enabling a user to prepare a tradeof assets/liabilities to obtain a user desired tax consequence.

One particularly advantageous implementation of the above system of thepresent invention includes an electronic trading system being coupled tothe portfolio manager, wherein the portfolio manager forwards the tradeof the assets/liabilities to the electronic trading system, whichexecutes the trade. In this case, the electronic trading system passestrading information regarding the assets/liabilities to the portfoliomanager.

Another particularly advantageous implementation of the above system ofthe present invention provides that the display displays the potentialproceeds and the potential tax consequences on a graph with one axisrepresenting the potential proceeds and another axis representing thepotential tax consequence that would result from trading particularsubsets of assets/liabilities. In this graph, each potential trade of aparticular subset of the assets/liabilities is plotted as a point in thegraph, and each point has an attribute related to both a potentialproceeds and a potential tax consequence resulting from a trade of theassociated particular subset of assets/liabilities.

Yet another particularly advantageous implementation of the above systemof the present invention includes a database for maintaining anassociation of each asset/liability to each of the points plotted in thegraph that is displayed to the user. The database, if linked to aserver, could also be associated with other information regarding thesecurity (such as an analyst report, or 10-K, etc. so that when thesecurity is shown the user could also obtain other information about thesecurity).

Another particularly advantageous implementation of the above system ofthe present invention provides a user selection routine enabling theuser to select one of the points in the graph being displayed, and theprocessor further comprises a routine identifying to the user via thedisplay which of the assets/liabilities must be traded to obtain adesired tax consequence and a corresponding desired proceeds.

Yet another particularly advantageous implementation of the above systemof the present invention further includes a database maintaining a basisand acquisition date for each security in the portfolio. The portfoliomanager obtains a selling price for each of the securities in theportfolio. The display displays the potential proceeds and the potentialtax consequences on a graph with one axis representing the potentialproceeds and another axis representing the potential tax consequencethat would result from trading the various subsets ofassets/liabilities. Each potential trade of a particular subset of theassets/liabilities is plotted as a point in the graph, and each pointhas an attribute related to both a potential proceeds and a potentialtax consequence resulting from a trade of the associated particularsubset of assets/liabilities. The database maintains an association ofeach security to each of the points plotted in the graph displayed tothe user. The user input device enables the user to select one of thepoints in the graph being displayed thereby indicating the user'sdesired tax consequence and corresponding desired proceeds. Theportfolio manager identifies for the user which of theassets/liabilities must be traded to obtain the desired tax consequenceand corresponding desired proceeds, and executes a trade of theassets/liabilities identified upon confirmation by the user and confirmssuch trade to the user.

According to yet another aspect of the present invention, an apparatusfor enabling a user to determine capital asset tax consequences fromselling securities within a portfolio of securities and to obtain adesired capital asset tax consequence and a desired proceeds, includes acalculating means, a determining means, an obtaining means, and adisplay means. The means for calculating calculates a potential capitalasset tax consequence and a potential proceeds resulting from tradingeach of the securities. The means for determining determines a series ofsums of the capital asset tax consequences that would result fromvarious combinations of trades of particular subsets of the securities.The means for obtaining obtains the potential proceeds associated witheach of the series of sums resulting from the various combinations oftrades of the particular subsets of the securities used by thedetermining means. The means for displaying displays to a user in agraphical format the series of sums and the associated potentialproceeds in a graphical format. In this graph, one axis represents thecapital asset tax consequence and another axis represents the proceedsresulting from trading the securities. Each of the sums is plotted as apoint in a graph, and each point has an attribute related to a potentialcapital asset tax consequence and another attribute related to thepotential proceeds resulting from a trade of the securities underlyingeach of the points.

Another particularly advantageous implementation of the above device ofthe present invention further includes a means for executing a sale ofthe securities identified upon affirmation by the user and to be able toconfirm the sale of the particular securities selected by the user.

Yet another particularly advantageous implementation of the above systemof the present invention further includes a means for continuouslyupdating the graph both upon receipt of new market data regarding thesecurities in the portfolio or upon a change in the securitiescomprising the portfolio (including when securities are sold pursuant tothe use of the present invention). The system could also be updated toreflect changes that are incorporated in new versions of the programthat may be accessed at that time to reflect changes in tax rates, taxpolicies or other relevant factors.

Yet another particularly advantageous implementation of the above deviceof the present invention further includes a means for distinguishingbetween long-term and short-term capital gain and loss, and depictingthe two as two separate graphs or a superimposed combination of graphsor by combining the two types of capital asset gain or loss (i.e., shortor long) according to then applicable tax rules to create a combined neteffect for various combinations of sales.

According to yet another particularly advantageous embodiment of thepresent invention, the above device includes a means for maintaining anassociation of each security to each of the points plotted in the graphbeing displayed to the user, and a means for enabling the user toindicate a desired tax consequence by selecting one of the points in thegraph and identifying for the user which of the securities must be soldto obtain the desired tax consequence

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 depicts an exemplary graph presented to a user by the system ofthe present invention.

FIG. 2 depicts the relationship between the data underlying the pointsrepresented by the graph in FIG. 1 according to one exemplary embodimentof the present invention.

FIG. 3 depicts an exemplary embodiment of the system according to thepresent invention.

FIG. 4 depicts an exemplary graph presented to a user according to thepresent invention with three axes showing three different variables.

FIG. 5 depicts an exemplary graph presented to a user according to thepresent invention with three axes showing different securities on thethird axis.

FIG. 6 depicts an exemplary graph presented to a user according to thepresent invention with three axes showing the effect of time on the taxconsequences.

FIG. 7 depicts an exemplary graph presented to a user according to thepresent invention with two axes showing the price-time trade-off effectof converting from short to long term capital gain for an asset.

DETAILED DESCRIPTION

Referring to FIG. 1, shown therein is a graph 10, in which thehorizontal axis 11 represents the proceeds (e.g., money, or value) to berealized from the sale of assets/liabilities (e.g., securities) in theportfolio. While the discussion below focuses on securities, the systemdescribed herein is applicable to any asset/liability or fungibleproduct that can be traded, and for which there are potential taxconsequences (e.g., capital asset taxes and income taxes, includingthose of the federal, state, local and even foreign variety) from suchtrading. The vertical axis 12 represents the capital gain or loss (whichcan be either short-term or long-term) to be realized from the sale ofthe securities in the portfolio. The vertical axis could also representthe actual tax from the taxable gain or loss of the security, as opposedto the total taxable gain or loss. In other words, if the capital gainsrate applicable to that security was 20%, then the dollars representedon the vertical axis would be the actual tax payable from the sale,which would be about 20%, of the taxable gain.

Furthermore, for simplicity purposes we assume the case where the salecannot result in a negative cash realization, e.g., covering a shortsale after the stock has appreciated. However, instances of negativecash realization, i.e., where the investor must actually pay money toget out of the investment, are indicated to the left of the verticalaxis. The upper left quadrant 13 depicts instances when both negativecash realization and capital gains occur, while the lower left quadrant14 depicts those instances when there is negative cash realizationcoupled with capital loss.

When the user clicks on any point in the curve 1 plotted in graph 10,the system identifies the closest match of shares the user should sellto realize the cash and capital gain or loss the user desires. The useris then prompted to accept the choice and the system will execute thesales for the user. Alternatively, the user can override the selectionand make another choice.

As an example, if the user clicks on "A" 15, the system confirms withthe user and then accesses the trading routine, which sells the rightnumber and type (where you have a gain or a loss) of securities so thatno capital gain or loss occurs, i.e., there would be no tax on thetransaction, but the user would realize, say $10,000 in cash proceeds(which could also include a deduction for any transaction costs). At "B"16, the user would realize no capital gain or loss (i.e., no tax on thetransaction), but $20,000 in cash. At "C" 17, the user would realize themaximum capital loss that could be realized from sales of the securitiesin the system, say $4000, with cash realized of, say $8000. At "D" 18,the user would realize the maximum capital gain one could realize fromthe sales of the securities in the system, say $8500, with cash realizedof, say $16,500. At "E" 19, the user would realize the maximum amount ofcash, say $25,000, that could be realized from the sales of allsecurities in the system, with a resulting capital gain of, say $5500.

To determine the various points in the graph, the system calculates theproceeds that can be realized and the gain or loss for each security (ona share, or fractional share if appropriate, basis) held in theportfolio. The proceeds are determined by multiplying the expected salesprice for each security times the number of shares of each suchsecurity. The individual gain or loss is determined by subtracting thebasis for each security (on a share, or fractional share if appropriate,basis) from its current price. For example, if the user bought 10 sharesof Motorola at $40.00 per share total cost, then the basis in each ofthose 10 shares is $40. If the current price for each share is $60.00,then the potential capital gain is $20 for each of those identified 10shares and the total proceeds to be realized will be $60 per share sold.To determine the appropriate tax formula to apply to the potential gain,the system must track the date on which the securities were purchased,and be told whether the trading was part of a trade or business. Thisdetermines whether the gain is a capital gain or ordinary income, and ifcapital whether a short-term capital gain, or a long-term capital gain.The appropriate formulas are well-known to those in this art, and willnot be described in detail herein to keep the discussion brief.

By doing so for all of the securities (on a share, or fractional shareif appropriate, basis) and summing up all of the gains and the proceedsrealizable by a sale of all the shares for which there is gain, thesystem determines point "D" 18. (If there are sales that generate notax, then point "D" 18 would actually be a short horizontal line showingthat the proceeds can be somewhat increased or decreased whilemaintaining the maximum capital gain amount.) By summing up all of thelosses and the proceeds realizable by a sale of all the shares for whichthere is loss, the system obtains point "C" 17. (Again, if there aresales that generate no tax, then point "C" 17 would actually be a shorthorizontal line showing that the proceeds can be somewhat increased ordecreased while maintaining the maximum capital loss amount.) By summingup all of the proceeds that can be realized from the sale of all thesecurities, regardless of whether there are losses or gains or no tax,the system obtains point "E" 19. Point "B" 16 can be determined in avariety of ways such as by summing separately all gains and all losses,taking the lesser amount and matching (in the sense of "using up" suchgains or losses) all the sales that generate such gains or losses withsales that generate the maximum proceeds and have the opposite taxresult, and then adding proceeds from sales that generate no tax anddetermining the overall proceeds from all such sales. Point "A" 15 isdetermined by matching a gain with a loss and adding any sales for whichthere is no tax, until the total sale reaches the point on the axisrepresented by "A" 15.

According to the present invention, the underlying securities in thegraph could be all of the securities in the portfolio, or a subset ofthem. For example, the user could decide he wished to sell all of hishigh technology stocks, but wanted to do so only if it could be donewithout creating a capital gain. The system then creates the graph 10 inFIG. 1 using only those selected securities. The user can even selectonly one security, such as Motorola. In this case, the system then usesonly that security in the user's portfolio as the underlying data.

Once the user selects the securities to be sold, the system determinesthe graph 10 in FIG. 1 by plotting the various combinations of sales ofthe securities. Once plotted, the user can then select how much moneythe user requires and if the underlying data permits it, sell thecorrect lots of securities to obtain the desired cash with the desiredtax treatment (e.g., tax neutral).

The calculations can be simplified by asking the user whether the userdesires a tax neutral sale, in which case only the points that occur onthe x=0 axis need be calculated. Furthermore, if the user also requestsa specific amount of cash from a tax neutral sale, then the calculationis even simpler in that a specific coordinate has now been specified. Toobtain this coordinate, the system matches positive capital gains withnegative ones until the amount of the sale reaches the amount requested.Obviously, this may not always be possible, such as if a portfolio hasbeen in existence for many years, and all the user's assets haveappreciated in value and therefore the user has only capital gains andrealization of a certain amount of cash would not be possible withoutincurring a gain.

In addition, there may be multiple securities combinations associatedwith any specific point. For example, point "A" 15 may be represented bythe sale of $6,000 worth of shares of security X and $4,000 worth ofsecurity Y, or by $10,000 worth of security Z, etc. The system coulddetermine to show just one combination, or multiple combinations, oncethe user selected the preferred tax-cash outcome. Any combinations shownby the system once the user clicked on the applicable point could thenbe selected by the user clicking on the specific shown combination.Alternatively, the system itself could contain various algorithms thatwould pre-select the combinations to be shown to the user, such asalgorithms designed to keep the relative weights of the securities heldin the portfolio as constant as possible, or to eliminate all of onesecurity to the extent possible to simplify the portfolio, etc.

In addition, the graph and the system can be further refined todistinguish between capital gain and loss that is short-term andlong-term. Because the system could maintain a record of the date atwhich a security (on a share, or fractional share basis, if necessary)was acquired, the determination of short and long-term capital gain andloss would be determined from that information combined with theexpected sales price and tax basis information. The system could displaytwo graphs (one for short and the other for long-term capital gain andloss), or one graph combining the effects of each (utilizing thencurrent tax rules to depict then permitted offsetting of long-term andshort-term capital gain and loss positions). The two graphs could alsobe superimposed to create a composite graph showing the separate effectstogether on one set of axis. Alternatively, one graph could be modifiedto include a third axis forming a three dimensional graph, in which thethird dimension included short-term capital gains while the otherdimensions included proceeds and long-term capital gains. The systemwould also note the transactions entered into the system to date, inorder to keep track of short and long term gains already realized indetermining what could be realized on a forward-looking basis.

Yet another alternative embodiment is possible. This embodiment uses oneaxis to represent the actual taxes to be paid, while the remaining axisdepicts the proceeds to be derived from the sale. To determine the taxesto be paid, one merely performs the all too well-known capital gains taxcalculations, which can be done by software products, such as TurboTax,™for example.

Underlying the display of the tax consequences is a link to a table ordatabase that maintains an association between each point on the graphand the combination of trades required to achieve the indicated results.FIG. 2 depicts the link between the graph and the underlying data, whichis presented to the user in the form of a table. For example, byselecting point "B" 16, which is the point at which the most money isrealized without incurring a capital gain, the user activates the linkmaintaining the association between point "B" 16 and the datarepresenting point "B" 16. The system then displays a table 20 of thedata representing point "B" 16 to the user.

Referring to FIG. 2, the table includes a list of securities, the basisfor each security, the number of shares of each security, the date thesecurities were acquired, the current trading price for each security, apotential gain for each security, and a potential proceeds for eachsecurity. As the table must be updated as the pricing for each securitychanges, the table will not necessarily agree precisely with the actualresults achieved; however, absent a rapidly changing market, the actualresults should not be materially different from the user's desiredresults, and the user can specify that the trades shall be made as limitorders, or only if the price is within specified ranges or percentages(such as within 95%-105%) of the current prices for each security.

In the example shown in FIG. 2, the user selected point "B" 16, whichexposed table 20. This table 20 has four entries--Stock X, Stock Y, BondZ and Derivative M. The basis in Stock X is shown as $30.00 and the userpurchased 100 shares of Stock X on Mar. 13, 1990. Currently, the stockis trading at $100, which means the user has a potential gain of $7000,and the potential proceeds would be $10,000. When examining each of thesecurities, it becomes apparent that the net gain/loss is zero, but theproceeds are $19,000. As a result, the user can sell these foursecurities and realize $19,000 without paying any taxes.

Although, for simplicity purposes we have indicated round lots ofshares, the present invention is applicable to small lots, odd lots, andfractional shares, as described in detail in U.S. patent applicationSer. No. 09/139,020 which has been incorporated by reference.

Upon review of the "data" representing the selected point, the user canthen issue an instruction to trade some or all of the assets/liabilitiesrepresented by the "data." For example, if the assets/liabilities weresecurities held by the user, then the data would be a list ofsecurities, their purchase date, their tax basis and the existing price(e.g., at last closing). If the user approves the trade, then the systemaccesses the trading routine, which then performs the trade using thesystem described in the patent application mentioned above, which hasbeen incorporated by reference. If the user wished to sell only half ofhis Stock X holdings, the table would allow the user to select Stock X,specify the amount to sell, calculate the gain to realized from thatsale (and the proceeds) and update the graph to show the effect of suchsale.

Referring to FIG. 3, the system 30 of the present invention includes aprocessor 31, such as a personal computer or the like, coupled to adatabase 32, such as a hard disk drive or the like, a display 33, suchas a cathode ray tube or the like, and a user input device 34, such as amouse, keyboard or touch or voice activated user interface or the like.The processor 31 is coupled to a central server 37 via a network 35,such as the Internet, which interacts with the portfolio manager programexecuting on the processor 31. The server 37 may include part of theportfolio manager or not, as explained in the above referenced patentapplication. Coupled to the network 35 and hence to the server 37 is anelectronic trading system 36, which is well-known to those of skill inthe art, and which performs the actual trading of the securities.

The user input device could include a voice activated user input, any ofwhich are currently available.

Referring to FIG. 4, shown therein is a graph 40, in which thehorizontal axis 41 represents the proceeds (or money) to be realizedfrom the sale of securities in the portfolio. The vertical axis 42represents the capital gain or loss (long-term) to be realized from thesale of the securities in the portfolio and the third axis 43 representsthe capital gain or loss (short-term) to be realized from the sale ofthe securities in the portfolio. Curve 1a represents the sameinformation as curve 1 in graph 10 but only for long-term capital gain,and curve 1b depicts the same information as curve 1 in graph 10 butonly for short-term capital gain. This graph 40 would operate in thesame manner as the two-dimensional graph 10 described in FIG. 1 andwould contain the same features (e.g., click on any point in the curves1a and 1b depicted in graph 40, and the system will identify the closestmatch of shares the user should sell to realize the cash and capitalgain or loss the user desires).

Referring to FIG. 5, shown therein is a graph 50, in which thehorizontal axis 51 represents the proceeds to be realized from the saleof securities in the portfolio. The vertical axis 52 represents thecapital gain or loss (short and long-term combined, although there couldalso be additional drawings on the graph 50 to represent only short orlong term capital tax effects) to be realized from the sale of thesecurities comprising each of the specific security issues (a) in theportfolio. The third axis 53 is used to provide a three-dimensionalplacement to portray the effects of any selected securities issuescombined capital gain or loss (short and/or long term effects) to berealized from the sale of the securities in the portfolio. Curve 1arepresents the same information as curve 1 in graph 10 but only for asingle security, which in this case is Motorola. Curves 1b and 1crepresent similar information for securities IBM and Microsoft,respectively. The third axis could also show the same security issue(such as Microsoft), before and after a contemplated sale of some, butnot all, of the Microsoft shares held by the user. This graph 53 wouldoperate in the same manner as the two-dimensional graph 10 described inFIG. 1 and would contain the same features (e.g., click on any point inthe curves 1a, 1b, 1c in graph 50, and the system will identify theclosest match of shares the user should sell to realize the cash andcapital gain or loss the user desires), but the user would be permittedeasily to select transactions specifically by securities issue (a)instead of on a portfolio basis. In addition, a user could select anycombination of securities issues to be combined into a combined selectedportfolio graph (b) which would be the combined tax effects-proceeds forthe securities issues chosen by the user. The user could select eachissue to be graphed by clicking on the specific security in a list ofsecurities 55, and select the securities to be included in the combinedportfolio by selecting again from the list 54.

Referring to FIG. 6, shown therein is a graph 60, in which thehorizontal axis 61 represents the proceeds to be realized from the saleof securities in the portfolio. The vertical axis 62 represents thetaxable effect from the capital gain or loss (long and short-term) to berealized from the sale of the securities in the portfolio and the thirdaxis 63 represents the passage of time. This graph 60 would operate inthe same manner as the two-dimensional graph 10 described in FIG. 1 andwould contain the same features (e.g., click on any point in the curves(1a . . . 1n) depicted in graph 60, and the system will identify theclosest match of shares the user should sell to realize the cash andcapital gain or loss the user desires). The graph 60 portrays thecapital tax effects occurring from the transformation of short-termcapital gain/loss to long-term capital gain/loss on the user's taxposition, and shows how the passage of time will affect the taxconsequences from possible transactions at current prices. User's arethereby able to visualize what could be significant tax effectdifferences resulting from waiting to engage in a transaction. Forexample, curve 1a depicts the same information as curve 1 in graph 10 ata point in time, such as Sep. 30, 1998. Curve 1n represents the sameinformation but at a later point in time, i.e., Jun. 30, 1999. All thecurves between 1a and 1n represent other dates between Sep. 30, 1998 andJun. 30, 1999, e.g., Dec. 31, 1998 and Mar. 31, 1999.

Referring to FIG. 7, shown therein is a graph 70, in which thehorizontal axis 71 represents the proceeds to be realized from the saleof securities in the portfolio after taxes. The vertical axis 72represents the price at which the security must be sold to realize suchafter tax proceeds indicating the prices from selling the security as along term capital asset 76 (b) or as a short term capital asset (a) 77.Point 73 can be seen on the graph 70 showing a current price of, forexample, $250 for the asset indicating that if it were sold as a shortterm asset the after tax proceeds would be $170, if it were sold as along term-asset the after tax proceeds would be $210 (point 74) with thedifference (d) being $40 and that the price would have to fall to $200(point 75) from $250 (a $50 reduction (c)) before the benefits ofwaiting until the asset is long-term would be eliminated from thecurrent price point of $250.

The system of the present invention takes into account applicable taxrules that may affect the calculation of capital gain or loss. Theserules include the Wash Sale Rule and the computation of ordinary incomeon the sale of a bond having original issue discount or market discount.The system will also alert the user to areas where the tax law is notsufficiently well defined to permit application of a mechanical rule. Inthese situations, the system will recommend that the user consult a taxadviser.

Finally, although the description of the application of the inventionabove utilizes securities and capital asset tax consequences, theinvention could be applied to any series of assets or liabilities thathave tax effects or consequences. As used herein, tax effects or taxconsequences refers to any of the following--capital gains, capitallosses, ordinary gains, short-term capital gains, or long-term capitalgains, federal, state, foreign and/or local income or capital gainstaxes. Proceeds refers to any value derived from a trade of an asset orliability, including cash, credit, etc. Furthermore, as used herein,gains include positive gains as well as negative gains (i.e., losses).Assets/liabilities include any of the following: foreign or domesticsecurities, equities, options, warrants, mutual fund shares,commodities, bonds, notes, bills, derivatives, tradable assets orliabilities or any combination thereof, financial assets, limitedpartnership interests, private placement securities, foreign currencies,contracts, futures, bank loan syndication interests, debts, pollutionrights, global warming rights, and insurance claim interests.

What is claimed is:
 1. A method for enabling a user to determine taxconsequences from selling a plurality of assets/liabilities, said methodcomprising the steps of:a) determining a plurality of potential taxconsequences that would result from trading various combinations of theplurality of assets/liabilities, wherein each of the plurality ofpotential tax consequences represents the potential tax consequence thatwould result from trading one particular subset of assets/liabilitiesfrom among the plurality of assets/liabilities; b) determining aplurality of potential proceeds for each of the plurality of potentialtax consequences that would result from trading the various combinationsof the plurality of assets/liabilities; and c) displaying the pluralityof potential proceeds and the plurality of potential tax consequences ina graph having at least two dimensions.
 2. The method according to claim1, further comprising the step of trading automatically one of thesubsets of assets/liabilities based upon a desired tax consequenceselected by the user.
 3. The method according to claim 1, wherein thestep of displaying further comprises the step of displaying theplurality of potential proceeds and the plurality of potential taxconsequences on a graph with one axis representing the potentialproceeds and another axis representing the potential tax consequencethat would result from trading particular subsets of assets/liabilitiesfrom among the plurality of assets/liabilities, wherein each potentialtrade of a particular subset of the assets/liabilities from among theplurality of assets/liabilities is plotted as a point in the graph, andeach point has an attribute related to both a potential proceeds and apotential tax consequence resulting from a trade of the associatedparticular subset of assets/liabilities.
 4. The method according toclaim 1, wherein the graph has three axes, in which one axis identifiesthe potential tax consequences, another axis identifies sales proceeds,and the third axis identifies a particular asset/liability.
 5. Themethod according to claim 1, further comprising the step of maintainingan association of each asset/liability to each of the points plotted inthe graph.
 6. The method according to claim 1, further comprisingenabling the user to select one of the points in the displayed graph andthen identifying to the user a specific potential tax consequence and aspecific potential proceeds comprising that point, and a list of theassets/liabilities tradable to obtain the specific potential taxconsequence and the specific potential proceeds.
 7. The method accordingto claim 5, further comprising enabling the user to indicate a desiredpotential tax consequence and a desired potential proceeds by selectingone of the points in the graph, and then identifying to the user whichof the assets/liabilities must be traded to obtain the desired taxconsequence and desired potential proceeds.
 8. The method according toclaim 1, further comprising highlighting significant points in thegraph.
 9. The method according to claim 1, further comprisinghighlighting significant lines in the graph.
 10. The method according toclaim 8, wherein the significant points include a maximum potentialgain.
 11. The method according to claim 9, wherein the significant linesinclude potential proceeds realized with a potential zero taxconsequence.
 12. The method according to claim 1, further comprising thestep of enabling the user to indicate a desired potential proceeds andoutputting a list of assets/liabilities to sell to obtain the desiredpotential proceeds while incurring a specified tax consequence.
 13. Themethod according to claim 1, further comprising the steps of:determining for each asset/liability whether the asset/liability hasbeen held for a sufficient time to qualify for long-term capital gaintreatment, and showing as the result a graph.
 14. The method accordingto claim 13, wherein the graph includes as two separate graphs, thetax-cash positions for short-term and long-term capital tax treatment.15. The method according to claim 1, further comprising the steps ofenabling the user to time shift the portfolio by specifying a date andhaving the tax consequences reflected in the portfolio and currentprices transformed to long-term gain from short-term gain as time isdeemed to be passing regarding the portfolio's holdings.
 16. The methodaccording to claim 1, further comprising the steps of determining a taxsavings resulting from a passage of time in a conversion of short-termgains to long-term gains in the event of a sale of an asset/liabilityand determine the reduction in price from current price levels thatwould be needed to offset the tax savings.
 17. The method according toclaim 2, further comprising exporting the information regardingassets/liabilities traded to a tax program, in a format thatautomatically inserts such information in appropriate places forinclusion in such program for reporting to appropriate governmentalagencies.
 18. The method according to claim 16, further comprisingreceiving information from a tax program, and comparing the informationto database information regarding the plurality of assets/liabilities toidentify potential tax savings from engaging in a transaction involvingany of the assets/liabilities in the database.
 19. The method accordingto claim 1, further comprising the steps of:maintaining a basis and dateof acquisition for each of the plurality of assets/liabilities in theportfolio; obtaining a trading price for each of the plurality ofassets/liabilities in the portfolio; displaying the plurality ofpotential proceeds and the plurality of potential tax consequences on agraph with one axis representing the potential proceeds and another axisrepresenting the potential tax consequence that would result fromtrading particular subsets of assets/liabilities from among theplurality of assets/liabilities, wherein each potential trade of aparticular subset of the assets/liabilities from among the plurality ofassets/liabilities is plotted as a point in the graph, and each pointhas an attribute related to both a potential proceeds and a potentialtax consequence resulting from a trade of the associated particularsubset of assets/liabilities; maintaining an association of each of theplurality of assets/liabilities to each of the points plotted in thegraph displayed to the user; enabling the user to select one of thepoints in the graph being displayed thereby indicating the user'sdesired tax consequence and desired proceeds; identifying to the userwhich of the plurality of assets/liabilities are tradable to obtain theuser's desired tax consequences and desired proceeds; and executing atrade of the assets/liabilities identified.
 20. The method according toclaim 1, further comprising the step of soliciting from the user anestimate of the user's marginal tax rate.
 21. The method according toclaim 1, further comprising the step of calculating an expected tax tobe paid in connection with a proposed trade.
 22. The method according toclaim 1, further comprising the step of calculating an expected tax tobe paid in connection with a proposed series of trades.
 23. The methodaccording to claim 1, further comprising the steps of distinguishingbetween long-term and short-term gain and loss, and depicting the two astwo separate graphs.
 24. The method according to claim 1, furthercomprising the steps of distinguishing between long-term and short-termgain and loss, and depicting the two as a superimposed combination ofgraphs.
 25. The method according to claim 1, further comprising thesteps of distinguishing between long-term and short-term gain/loss, andcombining the long-term and short-term gain/loss according to thenapplicable tax rules to create a combined net effect for variouscombinations of trades.
 26. A computer-readable medium storinginstructions that, when executed by a processor, cause the processor toparticipate in actions comprising:maintaining a tax basis registrystoring a basis for each asset/liability; calculating a potential taxconsequence for each asset/liability in the registry selected by theuser for potential trade and the potential proceeds from the potentialtrade; presenting a graphical representation of at least two dimensionsof an overall tax consequence for each possible combination of trade ofthe selected assets/liabilities and potential proceeds resulting fromeach possible combination of trade; and interacting graphically with theuser to enable the user to indicate a desired combination of taxconsequences and potential proceeds.
 27. The medium according to claim26, further comprising interacting with a computer program thatcalculates a taxable effect of a transaction based on other taxabletransactions, income and other taxable items known to the user orexpected to be engaged in by the user.
 28. The medium according to claim26, further comprising implementing an expert agent that manages taxeffects and alerts the user to various strategies that the user may wishto employ.
 29. The medium according to claim 28, wherein the expertagent monitors the user's tax position by comparing tax effects fromvarious proposed or available transactions and determining whether anysuch transactions achieve goals preset by the user.
 30. The mediumaccording to claim 29, wherein the goals include predetermined levels oflong-term gain.
 31. The medium according to claim 29, wherein the expertagent then alerts the user as to the satisfaction of such goals by apop-up window.
 32. The medium according to claim 29, wherein the expertagent sends an order to the electronic trading system to execute thetransaction identified by the expert agent without any userintervention.
 33. The medium according to claim 29, wherein the expertagent sends an order to the electronic trading system to execute thetransaction identified by the expert agent with confirmation by theuser.
 34. A system for enabling a user to determine tax consequencesfrom selling a plurality of assets/liabilities comprising the steps of:aprocessor determining a plurality of potential tax consequences thatwould result from trading various combinations of the plurality ofassets/liabilities, wherein each of the plurality of potential taxconsequences represents the potential tax consequence that would resultfrom trading one particular subset of assets/liabilities from among theplurality of assets/liabilities, said processor also determining aplurality of potential proceeds for each of the plurality of potentialtax consequences that would result from trading the various combinationsof the plurality of assets/liabilities; and a display coupled to theprocessor and displaying the plurality of potential tax consequences andthe potential proceeds corresponding with each of the plurality ofpotential tax consequences determined by the processor in a graph havingat least two dimensions.
 35. The system according to claim 34, furthercomprising:a user input device coupled to the display and indicating auser desired tax consequence to the system; and a portfolio managercoupled to the user input device and enabling a user to identify a tradeof assets/liabilities to obtain a user desired tax consequence.
 36. Thesystem according to claim 35, further comprising an electronic tradingsystem coupled to the portfolio manager, wherein the portfolio managerforwards the trade of the assets/liabilities to the electronic tradingsystem, which executes the trade.
 37. The system according to claim 36,wherein the electronic trading system passes trading informationregarding the assets/liabilities to the portfolio manager.
 38. Thesystem according to claim 34, wherein the display displays the pluralityof potential proceeds and the plurality of potential tax consequences ona graph with one axis representing the potential proceeds and anotheraxis representing the potential tax consequence that would result fromtrading particular subsets of assets/liabilities from among theplurality of assets/liabilities, wherein each potential trade of aparticular subset of the assets/liabilities from among the plurality ofassets/liabilities is plotted as a point in the graph, and each pointhas an attribute related to both a potential proceeds and a potentialtax consequence resulting from a trade of the associated particularsubset of assets/liabilities.
 39. The system according to claim 38,further comprising a database for maintaining an association of eachasset/liability to each of the points plotted in the graph that isdisplayed to the user.
 40. The system according to claim 39, wherein theuser input device comprises a user selection routine enabling the userto select one of the points in the graph being displayed, and theprocessor further comprises a routine identifying to the user via thedisplay which of the assets/liabilities are tradable to obtain a desiredtax consequence and a corresponding desired proceeds.
 41. The systemaccording to claim 35, further comprising a database for maintaining abasis and date of acquisition for each asset/liability.
 42. The systemaccording to claim 36, wherein said portfolio manager obtains a tradingprice for each of the assets/liabilities.
 43. The system according toclaim 42, wherein said display displays the plurality of potentialproceeds and the plurality of potential tax consequences on a graph withone axis representing the potential proceeds and another axisrepresenting the potential tax consequence that would result fromtrading the various subsets of assets/liabilities from among theplurality of assets/liabilities, each potential trade of a particularsubset of the assets/liabilities from among the plurality ofassets/liabilities is plotted as a point in the graph, and each pointhas an attribute related to both a potential proceeds and a potentialtax consequence resulting from a trade of the associated particularsubset of assets/liabilities.
 44. The system according to claim 43,wherein a database maintains an association of each asset/liability toeach of the points plotted in the graph being displayed to the user. 45.The system according to claim 44, wherein the user input device enablesthe user to select one of the points in the graph being displayedthereby indicating the user's desired tax consequence and correspondingdesired proceeds.
 46. The system according to claim 45, wherein theportfolio manager identifies for the user which of theassets/liabilities are tradable to obtain the desired tax consequenceand corresponding desired proceeds, and executes a trade of theassets/liabilities identified upon confirmation by the user and confirmssuch trade to the user.
 47. An apparatus for enabling a user todetermine capital asset tax consequences from selling a plurality ofsecurities within a portfolio of securities and to obtain a desiredcapital asset tax consequence and a desired proceeds, said apparatuscomprising:means for calculating a potential capital asset taxconsequence and a potential proceeds resulting from trading each of theplurality of securities; means for determining a series of sums of thecapital asset tax consequences that would result from variouscombinations of trades of particular subsets of the securities fromamong the plurality of securities; means for ascertaining potentialproceeds associated with each of the series of sums resulting from thevarious combinations of trades of the particular subsets of thesecurities from among the plurality of securities used by thedetermining means; means for displaying to a user in a graph having atleast two dimensions the series of sums and the associated potentialproceeds, wherein one axis represents the capital asset tax consequenceand another axis represents the proceeds resulting from trading thesecurities, each of the sums being plotted as a point in a graph, andeach point having an attribute related to a potential capital asset taxconsequence and another attribute related to the potential proceedsresulting from a trade of the securities underlying each of the points.48. The apparatus according to claim 47, further comprising:means formaintaining an association of each security to each of the pointsplotted in the graph being displayed to the user; and means for enablingthe user to indicate a desired tax consequence by selecting one of thepoints in the graph and identifying for the user which of the securitiesare sellable to obtain the desired tax consequence.
 49. The apparatusaccording to claim 48, further comprising means for executing a trade ofthe securities identified by the user.
 50. The apparatus according toclaim 47, further comprising means for updating the graph upon receiptof new market data regarding the securities in the portfolio or upon achange in the securities in the portfolio.
 51. The apparatus accordingto claim 49, further comprising means for confirming to the user thetrade of the securities identified by the user.
 52. The apparatusaccording to claim 47, further comprising means for displaying anupdated graph when there is a change in the securities in the portfolioshowing the change that occurs when securities are sold from theportfolio, and noting the taxable income and the expected tax from anysuch sale.
 53. The method according to claim 1, further comprising thestep of trading one of the subsets of assets/liabilities based upon adesired combination of tax consequence and potential proceeds selectedby the user.
 54. The method according to claim 1, further comprising thestep of trading one of the subsets of assets/liabilities based upon adesired combination of tax consequence and potential proceeds selectedby the user by clicking on a point on the graph representing saiddesired combination of tax consequence and potential proceeds.
 55. Themethod according to claim 1, wherein the graph has three axes, in whichone axis identifies the potential tax consequences, another axisidentifies sales proceeds, and the third axis identifies time.
 56. Themethod according to claim 1, further comprising enabling the user toselect one of the points in the displayed graph and then identifying tothe user a specific potential tax consequence and a specific potentialproceed comprising that point.
 57. The method according to claim 8,wherein the significant points include a maximum potential loss.
 58. Themethod according to claim 8, wherein the significant points include apoint where the potential proceeds are maximized while remaining taxneutral.
 59. The method according to claim 8, wherein the significantpoints include a point where the potential proceeds are maximum.
 60. Themethod according to claim 9, wherein the significant lines includepotential proceeds that can be received with a specified amount ofpotential tax consequence.
 61. The method according to claim 9, whereinthe significant lines include potential tax consequences that can beachieved with a specified amount of potential proceeds.
 62. The methodaccording to claim 1, further comprising the steps of: determining foreach asset/liability whether the asset/liability has been held for asufficient time to qualify for long-term capital gain treatment.
 63. Themethod according to claim 13, wherein the graph includes one compositegraph of two such graphs superimposed on each other.
 64. The methodaccording to claim 13, wherein the graph includes one graph of thecombined effect utilizing applicable tax rules showing the results of acombination of various sales involving both short and long-term capitalasset qualified assets/liabilities.
 65. The method according to claim13, wherein the graph is a three dimensional graph showing long-termcapital gain or loss on one axis, short-term capital gain or loss onanother axis, and proceeds to be realized on a third.
 66. The methodaccording to claim 2, further comprising exporting the informationregarding assets/liabilities traded.
 67. The method according to claim2, further comprising exporting the information regardingassets/liabilities traded to a tax program.
 68. The method according toclaim 16, further comprising receiving information from a tax program.69. The method according to claim 1, further comprising the steps ofdistinguishing between long-term and short-term gain and loss.
 70. Themedium of claim 26, further comprising displaying a two-dimensionalgraphical representation of the tax consequence and potential proceedsfor each possible trade.
 71. The medium of claim 26, further comprisinglisting assets that must be traded to meet the tax consequences andpotential proceeds desired by the user.
 72. The medium of claim 26,further comprising enabling the user to authorize a trade of thespecific assets/liabilities.
 73. The medium of claim 26, furthercomprising providing the user with confirmation of a trade of thespecific assets/liabilities.
 74. The medium according to claim 29,wherein the goals include predetermined levels of long-term loss. 75.The medium according to claim 29, wherein the goals includepredetermined levels of short-term gain.
 76. The medium according toclaim 29, wherein the goals include predetermined levels of short-termloss.
 77. The medium according to claim 29, wherein the goals includepredetermined levels of proceeds.
 78. The medium according to claim 29,wherein the goals include predetermined levels of taxable effects. 79.The medium according to claim 29, wherein the expert agent then alertsthe user as to the satisfaction of such goals by an e-mail alert. 80.The medium according to claim 29, wherein the expert agent then alertsthe user as to the satisfaction of such goals by a notice in a file.